For 2003, Tech Marketers Are Just Shy of Bullish

Hope springs eternal in the tech sector. Despite the battering that technology companies have taken, a new survey says they believe the worst may finally be behind them. Meanwhile, they have learned to do more with less and have changed the way they look at marketing, eschewing brand building for a harder sell and more targeted approach.

The CMO Council, an association of chief marketing officers at major technology companies, conducted the online survey of 350 members in December. The study showed that after serious reductions in their departments during the past year—more than 70 percent either downsized or reorganized—few tech marketers expect to make further cuts. In fact, about a third intend to increase their marketing head count this year, versus 5 percent who plan reductions.

More than a third of tech marketers also said they expect to increase marketing budgets this year, versus 23 percent who plan a decrease.

Still, respondents were somewhat downbeat about the results of the reorganizing and downsizing. Less than half, 43 percent, said these adjustments have made them more effective. As well, more than one out of three respondents said their ability to gain insight into the marketing strategies of competitors was poor or nonexistent, and only about one-fourth had systems to capture best marketing practices.

The ominously titled “Marketing Under Siege” study was conducted by marketing analysis firms GlobalFluency and the Aberdeen Group for the CMO Council, which is based in Palo Alto, Calif. The “siege” is an acknowledgment of the realignments marketing departments have undergone since the tech bubble burst in 2000, said Donovan Neale-May, managing partner of the council and president of GlobalFluency.

The industry has yet to see signs of a comeback. Worldwide sales of PCs, for example, were estimated to be flat or up by just 1 percent last year over 2001’s $183 billion, according to tech consultancy IDC. PC analyst Roger Kay of IDC forecasts a far healthier 8.4 percent increase for 2003 as a best-case scenario; he warns that his estimate may drop in light of the ongoing malaise in the info-tech arena.

“All that belt-tightening has resulted in increased marketing-department effectiveness, but it has also wrought changes in perspective,” Neale-May said, citing the now scoffed-at strategy of impressing investors by spending lavishly on high-profile advertising.

“Many of the companies that attracted wide attention spent themselves out of existence,” said Gary Stein, an advertising analyst with Jupiter Research. “Now the goal is to spend the dollars … to drive sales and customer retention.”

Stein pointed to tactics such as “anchor deals,” in which a Web site such as Yahoo! will tell users that it is “powered by Oracle.” “You want to to get your name in front of qualified users,” he said. “It’s a clear way of demonstrating value, and from an advertising perspective, it’s tremendously cost-effective.”

Sources at technology companies largely concurred with the survey’s conclusions, especially the finding that size does matter in this segment. The executives acknowledged that bigger players are getting healthier faster than smaller ones, which tend to follow the marketing trends set by the category leaders (If Microsoft increases spending, for example, a smaller player gets the signal and does the same.) The largest technology marketers, in fact—IBM, Microsoft and Dell—topped the list of companies thought to have had the greatest marketing impact in 2002.

“I see the IBMs and Dells staying fairly in line with how they spent last year,” said one tech-company CMO. “For one thing, there’s not much more to spend and not much more to cut.”